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Limited Liability Partnerships

Limited liability partnerships is a form of partnership that operates like a limited liability company with some important differences. Learn how to organize and manage limited liability partnerships.

Limited Liability Partnership
Limited Liability Partnership

Definition

A limited liability partnership1 imposes some personal liability on all partners, including both general and limited parters. The scope of liability is narrower than in a general partnership.

A limited liability partnership (LLP) is a type of legal entity2 created by state law3

Limited liability partnerships are covered in Article 9 of the (Revised) Uniform Partnership Act (RUPA).

Reason to Form a Limited Liability Partnership

LLPs are a close cousin to LLCs. They both benefit from pass-through taxation and avoid double taxation of business profits.

LLPs often organized by professional services firms, such as accountants, architects, and lawyers. Partners remain individually liable for their actions. In an LLC, no personal liability passes to the individual members as a general rule.

Basic information

After you form a limited liability partnership, you must maintain it to keep it in compliance. Track the following information for a limited limited partnership:

  • Legal name is the registered name of the limited liability partnership.
  • Address should be the principle place of business.
  • Registered Agent or legal address is the place where you receive service of process.
  • Website is not legally required but is part of standard contact information.
  • Email is not legally required but is part of standard contact information.
  • Phone is not legally required but is part of standard contact information.
  • Place of Organization is the legal jurisdiction where the partnership is organized.
  • Tax Status is pass-through, unless there is an applicable exception.

Documents and filings

This table summarizes the types of partnership documents and filings:

Type Timing4 Expiration5
Organizational filings at formation No
Partnership agreement at formation No
Minutes ongoing No
Insurance ongoing Yes
Filings ongoing Yes
Partnership tax returns ongoing No
K-1s6 ongoing Yes
Capital account at formation No
Other ongoing Yes

Officers and directors

Management and ownership structures depend on the partnership agreement, type of partnership, and state law.

LLPs can create a flexible management structure, including a Board of Directors. This is not a requirement, but larger LLPs often choose to manage the partnership with a subset of the entire partnership.

Here is the information to track for officers and directors:

  • Type of Role: officer, director, or other (consultant, lawyer, accountant, or auditor)
  • Title: chair, director, President and CEO, Treasurer, Secretary, etc.
  • Name: first and last name
  • Start Date (term of service): date of appointment
  • End Date (term of service): date appointment ends

Please note that a person can have two different roles with very different terms of service.

Ownership

Ownership interests are called "partnership interests". You should capture the name of the owner and the percentage of ownership at a minimum.

Conclusion

To preserve the benefits of your legal entity, effective ongoing maintenance is critical.

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